Argentina May Pay Debt Advisers $88 Million

[pinto]

Jan. 23 (Bloomberg) -- Argentina plans to pay at least $88 million to investment banks to advise on restructuring about $100 billion of defaulted government bonds, the largest debt renegotiation ever, a person familiar with the plan said.

Morgan Stanley and Goldman Sachs Group Inc. are among seven foreign banks the government says are competing for the assignment. Argentina will choose at least two and pay a fee of about 0.35 percentage point of the value of new bonds issued in exchange for old debt, the person said. Argentina has said it would issue at least $25 billion of new bonds, which based on the planned fee would generate commissions of $88 million.

The firms that are bidding see an opportunity to pick up fees from the restructuring, said Christian Stracke, an analyst at CreditSights Inc. Many of the banks that do the bulk of debt underwriting in Latin America, including Citigroup Inc. and J.P. Morgan Chase & Co., chose not to participate. Those firms lost billions of dollars in Argentina's 2001 debt default and subsequent currency devaluation.

``Why are the banks going to do this? The simple answer is fat juicy fees,'' Stracke, head of emerging-markets research at New York-based CreditSights, said in an interview. ``The fees will be a windfall, especially for banks that aren't sitting on top of the league tables.''

http://quote.bloomberg.com/apps/news?pid=10000086&sid=a_vhTlEPtLyc&refer=news_index

[w4rma]

1. Wasn't it big banks who profited from Argentina's economic collapse in the

first place?

[pinto]

2. my thinking is that big banks always profit, the name of the game...n/t